50 per cent of companies in the GCC are not ready for VAT
If you’re not ready for the nation’s 5 per cent VAT which is scheduled to start from January 1, 2018, we have news for you, you are not alone.
According to a survey conducted by global consultants EY, over 50 per cent of businesses in the GCC have not started preparing for region’s new found VAT policy.
Of those surveyed, only 11 percent of businesses have assessed the changes needed to their financial operational and information technology processes ahead of the introduction of VAT, while only 29 percent have studied some of the new VAT requirements…
As for the alarmingly low rates of companies who have not yet tackled the nation’s introduction of Value Added Tax, ET believes that this is because there was “an increasing level of concern” that the lack of official guidance from governments in the region is “posing an increasing risk”.
“Clearly, for many businesses in the GCC region the time to get started is now. Although communication about the timeline for VAT implementation and details of the framework has been delayed, January 2018 is the stated target date,” EY said.
It added: “Any further delays in issuing country-specific VAT laws should not prevent companies from preparing for VAT in the GCC region.”
EY also highlighted that the concept of VAT is new to many of those living and working in the GCC and, hence its implementation needs to be properly explained…
Until then, this is what we know…
The VAT plan is to be rolled out across all six GCC countries (UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman) on January 1, 2018.
The UAE government is going to ask all companies making over $100k a year (AED367k) to register for the tax.
Leisure activities and items such as cars, electronics, jewellery, fizzy drinks and tobacco will fall under the taxed category.
The UAE is expected to pass a waiver on around 100 goods and services, such as food and healthcare. The bad news? A new report by BMI Research indicates that companies subjected to the 5 per cent tax will simply hike up their prices by this amount, making consumers pay more.
It is possible that some sectors such as education and healthcare will get special treatment, but the government is planning the 5 per cent rate pretty much across the board.
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